In April this year, Unitech, which was teetering on the verge of debt default,
raised Rs1,625 crore through qualified institutional placement (QIP). On 14th
May, DLF raised Rs3,860 crore by diluting 9.9% of promoters’ equity.
Indiabulls Real Estate followed raising Rs2,656 crore by diluting 9.3% of the
promoters’ stake through a QIP. Apart from this, banks have started
lending money to real-estate companies more freely. Another positive signal for
the builders is that ICICI Bank has recently reduced its floating reference
rate (FRR) applicable to floating rate for retail loans and home loans by
0.50%. The revised FRR is 12.75% as against 13.25%. Does all this mean that
real estate prices will start moving up now? Will those who were holding back
their purchases, hoping for prices to fall further, miss the bus?

Although they have started raising funds, builders are still not in a position
to raise the price of apartments. For individuals who had already gathered
money and were wondering, this is the right time to buy because you will get
good deals even now. We spoke to a few developers and found that they were
ready to negotiate prices by 5% over the phone. They insisted on meeting and
negotiating which will lead to further reduction in rates. The Jaypee group had
offered a car for every flat booked at its housing projects in Noida and
Greater Noida.

Pranay Vakil, chairman Knight Frank said, “As the money has started
flowing in, slowly the developers will again get back to volume sales but it
might take time. However, in the next six months, I don’t think the rates
of residential areas will go down any further.” He also added, “This is
the best time to buy a finished property.” But if you are looking for a cosy
office space, Vakil suggests you to wait because he feels that prices will go
down further in this segment.

“This is a good opportunity for people to own a home of their own. At
times like these, developers are willing to make attractive offers.
What’s more, there are higher chances of getting a property of your
choice which could be the best thing for the buyer. We feel property prices
cannot go down much further from where they are today and with the worst on the
economy front behind us, people interested in owning a property should
seriously look at buying,” said Renu Sud Karnad, joint managing director,
Housing Development Finance Corporation Ltd (HDFC).

According to Sunil Bajaj, property consultant, “Opportunity is still
there, since there is a significant ready stock which is lying with investors
and most developers have come out with attractive buyer-friendly schemes. Also,
unlike shares, choice runs out for the best selection in projects which is one
of the most important criteria in buying a property.” Smart buyers have been
taking advantage of this. HDFC has seen a continuous improvement in the number
of inquiries and loans each month over the past four to five months. Buyers,
who dreamt of having their own property in Mumbai, have seen their dreams
turning real.

The fact is: millions of buyers are ready to buy flats if the price is right.
In a recent auction, the Maharashtra Housing and Area Development Authority
(MHADA) received 4.34 lakh applications for the 3,863 flats on offer. The Delhi
Development Authority’s (DDA) 5,010 low-cost homes attracted as many as
560,000 aspirants. Many realtors are trying to sell one-bedroom flats at a
price starting at Rs4 lakh. According to Renu Sud Karnad, “The apartments
offered in newly launched projects are smaller by 25%-30% now — to around 1,000
sq ft for two-bedroom and 1,200 for three-bedroom. This means the effective
cost of acquiring is down by over 40%.” In effect, builders have realised that
affordability is the key. So, bargain and close the deal. – Pallabika
Ganguly